The Consumer Electronics Association (CEA) applauded the latest state to have a sales tax holiday, South Carolina, which held a moratorium on taxes concerning home computer purchases Aug. 3-5.
The holiday, which is the second annual event for the state, enabled citizens to buy PCs, software, peripherals, PDAs and related service contracts without the 5 percent state sales tax or any county taxes during the back-to-school shopping season.
According to CEA, the average cost of a home PC system is about $1,150, so during a North Carolina sales holiday consumers will save as much as 7 percent, or $80, on their purchase depending upon location.
Last year, Pennsylvania joined South Carolina as the first states to enact tax holidays for computer purchases. CEA said that retailers reported an 80 percent increase in PC sales in South Carolina during last year's holiday, while Pennsylvania's sales were up 60 percent.
CEA research has shown that 27 percent of families with household incomes of less than $25,000 would be more likely to buy a home computer if they did not have to pay sales tax. In addition 49 percent of all households who do not own a computer, but plan to buy one in the next year, say that a sales tax holiday will improve the likelihood of such a purchase.
In other tax-related news, the National Retail Federation (NRF) is urging Congress not to reauthorize the Internet Tax Freedom Act of 1998 without addressing the loophole that allows most Internet and mail-order purchases to escape state sales taxes. The House Judiciary Committee's Subcommittee on Commercial and Administrative Law has passed the act to the full committee. The House is expected to vote on the act by September.
NRF government and industry affairs VP Scott Cahill said in a prepared statement, "In an industry with profit margins as narrow as they are in retail, the lack of sales tax is a significant price advantage."
Cahill added, "Consumers should pick winners and losers based on selection, service and convenience. Tax policy should not provide one [type of] retailer with a pricing advantage over another."
Cahill's remarks came as the House Judiciary Committee's Subcommittee on Commercial and Administrative Law prepared to vote on legislation that would extend the existing law for five years without addressing the sales tax issue.